The Wisconsin Department of Financial Institutions, Division of Banking, has finalized new regulations governing adjustment service companies, effective October 1, 2025. Adjustment service companies, businesses that, for a fee, assist consumers with debt management or settlement, have long been required to register in Wisconsin and until now could only charge very limited fees. The new rule authorizes additional fee structures and incorporates key protections from the federal Telemarketing Sales Rule (TSR) into Wisconsin’s regulatory framework.
Under the revised regulations, Wisconsin now expressly permits a performance-based model under which providers may charge up to 30 percent of the savings achieved on a consumer’s settled debt. In line with the TSR, providers may not collect fees on a consumer’s debt until it has been successfully settled and the consumer has made at least one payment pursuant to that settlement. The rule also preserves the existing capped monthly fee option of no more than 10 percent of funds distributed or $120 per month, whichever is less.
Beyond fee structures, the regulation introduces new compliance obligations in line with the TSR. Contracts must now include detailed payment schedules, disclosures about potential negative credit impacts if payments to creditors are stopped, and timelines for making settlement offers or achieving represented results. If providers require consumers to place funds in special accounts, among other requirements, these special account funds must be federally insured, owned by the consumer, and promptly refunded if the consumer withdraws, with only reasonable administrative fees permitted.
The amendments also expand prohibited practices, barring companies from advising consumers to default on debts unless specific disclosures are provided, including information on lawsuits and referrals for legal assistance. Licensees face heightened recordkeeping requirements covering contracts, reconciliations, communications (including call recordings if made), and advertising materials. In addition, providers using the new performance-based fee model must file annual reports detailing enrollment numbers, fees collected, settlement outcomes, timelines, and consumer program completions or withdrawals.
The Department emphasized that the changes do not impose new burdens on compliant licensees but expand permissible business models to align state law with federal requirements. For consumers, the rules are expected to encourage more providers to offer services in Wisconsin while ensuring robust safeguards against abusive practices.
